Smoky Mountain Corporation makes two types of hiking boots%u2014Xtreme and the Pathfinder. Data concerning these two product lines appear below:
|
Xtreme |
Pathfinder |
| Selling price per unit |
$141 |
$103 |
| Direct materials per unit |
$59 |
$45 |
| Direct labor per unit |
$36 |
$36 |
| Direct labor-hours per unit |
3 DLHs |
3 DLHs |
| Estimated annual production |
13,000 units |
74,000 units |
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|
The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours. Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below:
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| |
| |
|
| Estimated total manufacturing overhead |
$4,332,600 |
| Estimated total direct labor-hours |
261,000 DLHs |
|
| Requirement 1: |
| (a) |
Calculate the predetermined overhead rate.
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|
| (b) |
Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system.
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